Hyundai fined for capping dealer discount

Hyundai Motor India Ltd. has been fined 87 crores by the Competition Commission of India for indulging in anti-competitive practices by capping the amount of discount its dealers could offer. Thereby stifling dealers’ ability to compete freely in the market and trying to maintain a minimum sale price.

In a 44-page order, the Competition Commission of India, said, “When a minimum resale price maintenance is imposed by the manufacturer of a particular brand, distributors are prevented from decreasing the sale prices. In other words, the mechanism does not allow the dealers to compete effectively on price. The stifling of intra-brand competition results in higher prices for consumers.’’

It further went on to state, “The infringing anti-competitive conduct of HMIL in the instant case included putting in place arrangements, which resulted into resale price maintenance by way of monitoring of maximum permissible discount level through a discount control mechanism and a penalty mechanism for non-compliance of the discount scheme. Such conduct pertains to and emanates out of sale of motor vehicles.”

While it is heartening to see the Competition Commission of India acting on behalf of consumer rights and trying to ensure manufacturers do not fix minimum resale price. A lot more needs to be done, especially against the electronic and consumer goods companies, which are known to act against online retailers and distributors, who offer products at cheaper than minimum specified price.

We certainly hope, CCI will look into those companies as well and ensure, we as consumer can get maximum discount that we can, dictacted not by a manufacturer, rather by the open and competitive market!